Lago Agrio: Court Holds Donziger Liable For More Than $800,000 In Costs

Oil barrels in Ecuador

One of the worst things about losing a civil action is that your victorious opponent can seek to recover its costs. Talk about being kicked when you’re down! In the United States, unlike in many other jurisdictions, “costs” do not include attorney’s fees. In general, each side bears its own lawyer’s fees. But you can recover items such as filing fees, the costs of service of process, the costs of court reporters, etc. In today’s case of the day, Judge Kaplan, the judge who ruled in favor of Chevron in its RICO case against Steven Donziger and the Lago Agrio plaintiffs, awarded potentially ruinous costs to Chevron against Donziger.

The main item of costs was more than $900,000 of fees paid to a special master. The judge had appointed the master because of

[The] parties’ proposal to take at least 42 depositions in a relatively short period, the extreme contentiousness of counsel, deposition misconduct by Donziger and counsel for him and the LAP Representatives in a related prior litigation, defendants’ obstructive and disruptive actions in this case, the possibility that important depositions in this case would occur outside the United States and require effective and timely supervision, and the high likelihood that many claims of privilege would be asserted, including during depositions outside New York and the United States, making prompt rulings essential to proper progress of this case.

Each party was to advance 50% of the cost, subject to reallocation at the end of the case. But Donziger and the LAPs refused to pay their share. So Chevron advanced the entire cost, and the question was whether Donziger would have to bear that cost.

I’m not going to review the details of the judge’s reasoning. The bottom line is that Donziger must pay 85% of the special master’s fees, or $741,526.49, in addition to more than $70,000 in more traditional costs (service fees, court reporter’s fees, and translation fees). Donziger has asserted that he lacks resources, though it’s hard to know—the court’s decision finds that Donziger failed to make adequate disclosures about his financial situation at various times during the case. But barring some commitment from a third-party litigation funder to pay these costs, there’s no question they will be burdensome for Donziger.

No doubt Donziger will take an appeal from this order, though it is worth noting that in order to obtain a stay of execution while an appeal is pending, it is generally necessary to file a supersedeas bond, which courts generally will not approve without sureties. So Donziger may face an immediate money problem. And these costs are not the only trouble he is facing: a recent press release from a firm aligned with Donziger indicates that he is facing disciplinary proceedings in New York (as I reported earlier) and that the bar is seeking to give Judge Kaplan’s findings of fact in the RICO case preclusive effect, which would be devastating, and to temporarily suspend Donziger from the practice of law immediately.

Let me just add that if you wonder whether those in the know are reading Letters Blogatory, check out footnote 39 in today’s decision.

3 responses to “Lago Agrio: Court Holds Donziger Liable For More Than $800,000 In Costs”

  1. Peter Lynn

    This case is certainly not doing much to improve the image of the legal system, which is quite often seen as a bit of a game in which the side with the most expensive lawyers will win through gamesmanship and underhand tactics. I mean no offence by that, and believe most lawyers (yourself certainly included) to be ethical, and that a lot of the perception described is down to a lack of understanding amongst us non lawyers. As a non lawyer I know there is much I don’t understand, so in following this case I have tried to learn, but am left mightily puzzled on at least three major issues: –

    – How it is Chevron were able to argue that Ecuador provided an adequate forum for the purposes of Form non Conveniens, yet totally inadequate for the purposes of recognition

    – How could evidence given by Guerra help Chevron despite the character of the man and the fact he was well coached and well rewarded

    And now

    – Chevron avoided a trial by jury precisely because they dropped monetary claims, so how is it that they are now able to come back for the money?

    Ok, on the last point I do understand that out of pocket costs are different to claims, but the amount in question is extortionate. A claim of just $20 would have been enough to entitle Donziger to a jury, yet Judge Kaplan is apparently able to determine alone that he is obliged to pay 85% of a $900,000 bill.

    1. Thanks, Peter, for the comment. I share your questions on point (1) and have written before that I think a party in Chevron’s position assumed the risk and should not be able to claim that the foreign courts it insisted on using do not afford due process; on the other hand, in its stipulation, Chevron expressly reserved the right to assert the grounds for non-recognition included in US law, which include denials of due process etc. But I agree with you that this is an important and difficult issue.

      I also have given my reasons for disbelieving Judge Guerra’s testimony, but I do not think you or I am in a position to say that the finder of fact was wrong to credit his testimony, particularly because Donziger did not appeal from the findings of fact. And anyway, the ghostwriting business is not the whole of the fraud case: there is no question in my mind about the Cabrera fraud.

      I think you have answered your own third question. It’s true the costs of the master were very high. Perhaps if Donziger had made more fulsome financial disclosures the judge might have refused to impose the costs on him, but the judge concluded that Donziger had not been forthcoming about his financial means and backing. Again, perhaps we will see an appeal, but I don’t think I am in a position to say the judge was wrong on this.

  2. […] of default judgment against those LAPs. It intends at least to seek to hold them liable for the costs Chevron has already been awarded against Donziger. It may have other purposes in mind, too, though […]

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